Don’t Be Disappointed By The Short Term

A melange of energy topics to cover this week, including a quick wrap-up of earning and an update on a trade I suggested on January 28.

First, quarterly earnings for energy brought almost exactly what we might have imagined – at least as far as earnings were concerned: Everybody reported a year over year decline in revenues and either missed or beat expected earnings by a small margin. But that wasn’t the important story. What was important were the other additional financial moves by many energy companies and the general outlook from CEO’s on conference calls: BP CEO Bob Dudley’s pessimism of possibly $10 oil and a very long recovery cycle was the worst, but by no means the outside viewpoint from oil execs. Exxon-Mobil’s Rex Tillerson was circumspect about any acquisitions they might make in the near future; this after practically telegraphing a buy of some kind in US oil shale last quarter. From my perch, it’s a wondrous and wonderful turnaround from the “keep calm and frack on” sangfroid of little over 5 months ago. When no one was worried, you were right to be cautious. Now that everyone’s worried, I’m more convinced than ever that the bottom will be seen in 2016.

Meanwhile, extreme panicked moves financially were taken by the large and mega caps, including secondaries from Hess (HES) and Devon (DVN) and a dividend cut from Conoco-Philips (COP). Each of these must be taken separately in their wisdom,…